---
id: po.wb.economics.well-program
title: Well-Program Economics — Scenario Table, NPV, IRR, Payout
category: Economics
requires: []
tags:
  - economics
  - well-program
  - scenario-analysis
  - excel-table
  - npv
  - irr
  - payout
  - pv-i
  - eur
  - texas
  - severance-tax
  - working-interest
  - arps
---

# Well-Program Economics — Scenario Table, NPV, IRR, Payout

## Description

The economics of a small Texas horizontal program (5–10 wells), modelled month by month, with one
scenario per row of an Excel Table. Each row carries its assumptions — prices, D&C, LOE, type-curve
factor, well count, working and net revenue interest, discount rate — and, in the same row, its NPV,
IRR, payout, PV/I, EUR per well and net cash. Change a row or add one at the bottom and its results fill
in. The default assumptions are illustrative, not a price deck.

Wells come online one every few months and are drilled the month before. Each follows an Arps
hyperbolic type curve switching to an exponential terminal decline, sampled at mid-month, with gas from
a constant GOR, and produces until its operating margin reaches zero (the economic limit) or a life cap,
then is plugged. Net revenue is the NRI share; Texas severance (4.6 % oil, 7.5 % gas) is charged on the
oil and gas value and ad valorem on net revenue; costs and capital are the WI share. IRR is the monthly
IRR annualised, found by bracketing the economic root so that the spurious negative root a plugging cost
creates at low prices is not mistaken for it.

A partner is a row: its own WI and NRI scale the costs and the revenue, so a 40 % partner at the same
revenue-to-working-interest ratio earns exactly 40 % of the base NPV. One annual escalation rate applies to
prices and operating costs. Price decks, risked or Monte Carlo economics, reserves booking and fiscal
regimes beyond the Texas taxes are not in version 1.

The Cash Flow sheet is the audit of one case, picked by number on the Scenarios sheet: the program year by
year, from the same monthly engine, with lines that show the annual rows reconcile to it.

The engine is workbook LAMBDAs, named in the catalog's style so they can be promoted: `PO.ECON.Arps.Di`,
`PO.ECON.Arps.Rate`, `PO.ECON.Arps.Time`, `PO.ECON.NPV.Monthly`, `PO.ECON.IRR.Monthly` and
`PO.ECON.Payout`, and the `MODEL.*` functions that bind this workbook's assumptions.

## Inputs

Named cells you can edit — every result recalculates from them. A Scenarios row can override any of its
assumption columns with a number or a formula.

| Name | Description | Default | Unit |
|---|---|---|---|
| `EC_Wells` | Wells in the program | 8 | wells |
| `EC_FirstOnline`, `EC_Spacing` | First well online, months between wells | 3, 1 | month, months |
| `EC_LifeCap` | Longest producing life of a well | 360 | months |
| `EC_IP` | Initial oil rate, one well | 800 | bbl/d |
| `EC_b`, `EC_Dei`, `EC_Dterm` | Arps exponent, initial and terminal decline | 1.0, 65 %, 8 % | —, per year |
| `EC_GOR`, `EC_TC` | Gas–oil ratio, type-curve factor | 1500, 1.0 | scf/bbl, × |
| `EC_Oil`, `EC_OilDiff`, `EC_Gas`, `EC_GasDiff` | Prices and differentials | 70, 1.5, 3.0, 1.0 | $/bbl, $/MMBtu |
| `EC_Esc` | Escalation, prices and operating costs | 0 % | per year |
| `EC_WI`, `EC_NRI` | Working and net revenue interest | 100 %, 75 % | — |
| `EC_SevOil`, `EC_SevGas`, `EC_AdVal` | Texas severance and ad valorem taxes | 4.6 %, 7.5 %, 2.5 % | of value |
| `EC_DC` | Drilling and completion, per well | 7.0 | $MM |
| `EC_LOE`, `EC_LOEVar`, `EC_Gath`, `EC_PA` | Fixed LOE, variable LOE, gathering, plugging | 8000, 4, 0.5, 150000 | $/well-month, $/bbl, $/Mcf, $ |
| `EC_Disc`, `EC_Hurdle` | Discount rate, IRR hurdle | 10 %, 15 % | per year |
| `EC_Pick` | Case shown on Cash Flow (0 = base case) | 0 | — |

## Sheets

- `Guide`
- `Assumptions`
- `Scenarios`
- `Cash Flow`

The Scenarios sheet holds the Table (`ScenarioTable`) and an NPV-by-scenario bar chart that grows with it;
the Cash Flow sheet holds the annual audit (35 years) and a cumulative cash flow chart.

## Functions used

None from the add-in. The `PO.ECON.*` and `MODEL.*` names are LAMBDAs defined in the workbook itself, and every other formula is plain Excel.